Standing Committee E

[Mr. Roger Gale in the Chair]

Office of Communications Bill [Lords]

Roger Gale: I remind the Committee that this Chairman takes the view that we can have a stand part debate at the beginning of a clause's consideration or at the end, but not both. If I judge that the clause has been satisfactorily debated during discussion of the amendment, I shall not permit a stand part debate.Clause 5 Winding up of OFCOM on abandonment etc. of proposals

Clause 5 - Winding up of OFCOM on abandonment etc.

Amendment moved [this day]: No. 59, in page 4, line 34, at end insert— 
'after consultation with and consideration by a Joint Committee of both Houses of Parliament.'.—[Miss McIntosh.]

Anne McIntosh: Good afternoon, Mr. Gale, and welcome back to the Committee.
 We tried to keep the debate on amendment No. 59 brief to allow a short debate on the clause and I was about to sum up on the amendment when the Committee was adjourned. 
 The purpose of the amendment is to ensure that it is not just the Secretary of State who decides whether Ofcom is no longer necessary and that its winding up and dissolution comes before Parliament in primary legislation. My hon. Friend the Member for Tewkesbury (Mr. Robertson) and I tabled the amendment because it is more appropriate to have consultation with and consideration by a Joint Committee of both Houses of Parliament, rather than allowing the Secretary of State to make that decision alone. A Joint Committee is more appropriate than a Select Committee of this House, of the other place or of both.

Michael Fabricant: I support the amendment because it would help to bring accountability back to the House of Commons. The explanatory notes to the Bill state that clause 5 allows the Secretary of State to wind up Ofcom at any time, but if that happens after 2003, she has a duty to lay a draft order before Parliament. We have heard that there is doubt about the extent and powers of the shell organisation of Ofcom and that people will be seconded to it from the existing regulators, but we do not know how long the shell Ofcom will exist because it is not clear when the communications Bill will receive Royal Assent. For that reason, I suggest that ''the end of 2003'' is an arbitrary date. In any event, there should be full consideration by a Committee, as the Select Committee on Culture, Media and Sport recommended.
 I do not know whether my hon. Friend the Member for Vale of York (Miss McIntosh) will press amendment No. 59 to a Division, but it is right and proper that it should at least be discussed as a probing 
 amendment. I shall be interested to hear, yet again, what the Minister says. He will be aware of the Select Committee's recommendation that there should be full accountability to Parliament. However, I shall speak at greater length on this when we come to the debate on clause stand part.

Laurence Robertson: I, too, would prefer to speak on clause stand part if you allowed that, Mr. Gale, so my comments now will be brief.
 Under the Bill, it will be quicker and easier to wind up Ofcom than to set it up. My concern is the possibility that other regulations may not be in place when that occurs, which would cause confusion and mayhem to regulation of the industry. For that reason, the winding up of Ofcom deserves more than just an order before the House. I shall expand on those words if we have a stand part debate.

Kim Howells: As we made clear previously, the Government do not anticipate the need to use the provisions to wind up Ofcom. They are there purely as a safeguard and an assurance. The Government remain committed to having Ofcom operational by the end of 2003.
 Should the Secretary of State reach the conclusion that it is no longer necessary for Ofcom to continue to exist, clause 5(3) of the Bill already makes provision for any order made by her to wind up Ofcom to be laid in draft before Parliament and approved by resolution of each House. That provision was made at the behest of the Delegated Powers and Regulatory Reform Committee of another place. In its report, the Committee said that it considered it important for there to be sufficient opportunities for Parliament to discuss the fate of Ofcom before any order was made to abolish it and that it 
considers the affirmative procedure would be appropriate for this power.
 I agree. In the unlikely event that the Secretary of State were ever to need to use the power to wind up Ofcom, existing provisions in the Bill would allow Parliament adequate opportunity to consider whether that was reasonable. That is why the Government oppose amendment No. 59.

Anne McIntosh: I am grateful for the contributions made by my hon. Friends and by the Minister. In view of the fact that we shall, I hope, consider the procedures that, in the Minister's view, are more appropriate, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Anne McIntosh: In the very timely debate that we have just had, my hon. Friend the Member for Lichfield (Michael Fabricant) raised a point that was very supportive of the earlier argument that I made on what the transitional period should be. He helpfully referred to the end of 2003 and I agree that that should be the cut-off. I hope that we can obtain the Minister's agreement that that time scale will be strictly adhered to. I have some hesitation in accepting clause 5 as it
 stands. I tabled an earlier amendment, which would have meant that the Bill would fall after one year, but the Minister felt unable to accept it and it failed. As he and the Committee will recall, he said that a period of one year from the date of the Bill being enacted was insufficient time.
 I imagine that this Bill will reach the statute books in a matter of weeks but, speaking realistically, the main communications Bill might not do so until, say, June 2003. I do not think it unreasonable for my hon. Friends to seek a commitment from the Minister that, after the end of 2003, should the main communications Bill not have been introduced or should it have reached some insurmountable hurdle, he will seek to apply the draft order.

Kim Howells: Perhaps the hon. Lady will explain to me why, having failed in her first attempt to impose a time limit, she is now so insistent in trying to impose another. What would happen if a terrible disaster like the events of 11 September were to occur and the House were preoccupied with legislation that we cannot even envisage right now?

Anne McIntosh: With the greatest respect, I am only trying to help the Minister. It is his Bill that imposes a time scale, unless I am reading clause 5(2) incorrectly. It clearly states:
If . . . it appears to the Secretary of State at any time after the end of 2003.
 I would prefer it to say that it should be soon after the end of 2003. However, that point has been well made and I do not wish to be repetitive. There are other issues that we wish to discuss on this final day of our proceedings. 
 Will the Minister clarify the affirmative procedure? I understand that to exercise any objection to an affirmative resolution, one has to enter a prayer against it within a very short time scale. 
 I hope that the Minister will accept those few comments in the spirit of helpfulness in which they were made.

Michael Fabricant: Of course I support the inclusion of clause 5. A mechanism to wind up Ofcom will be required if the communications Bill, which has not yet been published, receives Royal Assent. However, it is also right and proper to consider what would happen in the unlikely event of it not receiving Royal Assent. As the Minister said, unanticipated circumstances could arise—heaven forbid—that not only delayed its introduction, but prevented it from receiving Royal Assent.
 Conservative Members support the establishment of a communications agency for all the reasons set out in the White Paper, which was preceded by the report of the Select Committee on Culture, Media and Sport. However, I want to pick up on a couple of points and raise a new point about clause 5. I agree with my hon. Friend the Member for Vale of York that 
at any time after the end of 2003
 should be rephrased. The word ''by'' should have been used. Whether 2003 is the date is another matter—it 
 could be 2004 or 2005—but there must be a sunset clause to provide some limitation. That is not in order to constrain us here in the House of Commons, but to give some reassurance to people in the industry that the Government have set themselves a realistic target for the establishment of the communications agency. 
 Everything that has come out of the Committee so far suggests that the Government are unclear about their timetable, about how Ofcom will be funded during the transitional stage and about how the regulatory bodies will be funded in terms of their providing people to be seconded to the shell Ofcom and of the extra work that will be required, which we discussed under clause 4. 
 Subsection (6) deals with the procedures that will apply in relation to the shell Ofcom's assets if—I accept that it is unlikely—it were to be wound up. Subsection 6(a) refers to the 
power to provide for the transfer of property, rights and liabilities of OFCOM to the Secretary of State, to any of the existing regulators or to any other such person as may be specified in the order.
 Who will be the arbiter where there is a dispute? If assets are owned by the shell Ofcom organisation, a dispute may arise from the ITC, the Department for Culture, Media and Sport or from the Department that is not represented here in Committee; the Department of Trade and Industry. Who will be the arbiter of where the liquidated assets are disposed? It is important that the Minister clarifies that. 
 Paragraph (b) refers to the power to provide for the property, rights and liabilities of Ofcom to be divided between different persons. There might be arguments from regulators, who could say that they will not accept liability. Who will be the arbiter? Similar questions relate to paragraph (c). 
 The part of the Bill that makes no attempt to address a particular problem—I wonder why, because it could have been anticipated—concerns compensation for the operating costs of Ofcom. I shall clarify what I mean. Earlier in Committee, it was established that Ofcom, in its shell form, would initially be funded either by the Treasury or by the Department of State.

Kim Howells: I have told the Committee on a number of occasions that the only source of funding will be loans made to Ofcom by the Secretary of State on behalf of the Department for Culture, Media and Sport. Either the hon. Gentleman is deaf, or he is forgetful.

Michael Fabricant: I thank the Minister for a customarily polite and generous intervention, for which he is known; I found it very helpful. The Minister may not be deaf or forgetful, but he has not fulfilled his promise to write me a letter, which he faithfully promised to do.

Kim Howells: I will.

Michael Fabricant: He says he will. He told me that he was going to do it quickly, and that has not happened. However, he is neither forgetful nor rude, so I will not pursue that line of argument because it would be out of order.
 We established that funding would be from loans. That was teased out of the Minister like a wisdom tooth; he had not volunteered the information until my hon. Friends probed him. Eventually, he told us that the money would be a loan, but was unable to tell us at what rate of interest. However, it is irrelevant whether the loan is from the Treasury, his Department or the DTI. I am grateful to the Minister for saying that it will be from his Department, but the end of the story is that it will be a loan that must be repaid. 
 Despite all the drafting, clause 5 makes absolutely no reference to who will repay the loan that will undoubtedly arise from the operating costs of Ofcom. Will that be a burden on the regulatory bodies, or on the bodies that are regulated? Why has that information been omitted from the clause? Is it a drafting error from the dysfunctional Department, or is it deliberate? 
 I appreciate that the Minister is becoming heated because the Committee has rightly exposed inconsistencies in the Bill. Proposed legislation is never perfect, which is why we have scrutiny in Committee. However, it is important in this final sitting that the Minister finally gives us real and tangible answers, rather than brief replies that are written by his officials. How are the operating costs to be dealt with? The assets and liabilities are dealt with in detail, but the operating costs are not. Why not, and who will be liable?

Laurence Robertson: I shall not add much to what I said earlier about the need for the winding-up process to be seriously considered. The customarily wide-ranging speech of my hon. Friend the Member for Lichfield covered many issues that concern us. We are setting up a body that will have potentially important duties and a large role. We need clarification on the points raised by my hon. Friend, such as what will happen to the body's assets.
 The Bill gives a lot of power to the Secretary of State. I shall not go over the ground covered by my hon. Friend the Member for Lichfield, but subsection (5)(b) provides 
power to make such incidental, supplemental, consequential and transitional provision as the Secretary of State thinks fit.
 Will the Minister clarify whether that will include only assets, or whether it will include responsibility for regulation? I am unsure what is intended, and I do not mean to trip him up by asking the question. 
 On the transfer of property, liabilities, rights, interests and other things that are listed, will the Minister clarify what sort of organisation and/or person those rights and obligations would be transferred to if the other regulators were no longer to exist? Because Ofcom cannot be wound up until beyond 2003, we must assume that the other regulators will not exist.

Angela Watkinson: I support the clause, but the power to wind up Ofcom is too great to lie with the Secretary of State. We cannot possibly know what period of time will have elapsed—it will be beyond 2003, and could be considerably beyond that—because clause 5(2) states:
at any time after the end of 2003.
 It is impossible to know what will have happened to either the industry or the former regulators by that time. They may have suffered financial loss or there may have been unforeseen developments in what is a fast-moving industry. A Committee of both Houses acting as an additional brake on such a decision before it were made would be a wise precaution because both the former regulatory bodies and the industry need that protection.

Kim Howells: Last week, the Committee discussed the need for a sunset provision in the Bill. Members of the Committee argued forcefully that such a provision was essential, and although the proposals that they made were inappropriate, we had a full discussion. Clause 5 will provide precisely what Opposition Members were arguing for. We do not anticipate having to use the powers provided in the clause, but it has been included in the Bill to provide a means by which Ofcom could be wound up should, for some unforeseen reason, insufficient progress be made.
 Clause 5 gives the Secretary of State the power to wind up Ofcom. If it is no longer necessary for it to continue to exist, the duty to wind it up will be open to her after the end of 2003. The hon. Member for Upminster (Angela Watkinson) asked about the affirmative resolution procedure—[Interruption.] Sorry, it was the hon. Member for Vale of York. Clause 5(3) provides that no order shall be made unless a draft order has been laid before Parliament. A debate will have to take place in each House, followed by a resolution. I hope that that satisfies the hon. Lady. It is a strong power that we have considered carefully. 
 Other provisions allow property, other assets and liabilities to be transferred to the Secretary of State from Ofcom, the existing regulators or other specified persons. The Secretary of State will be able to provide compensation to persons who suffer loss or damage because of a decision to wind up Ofcom.

Laurence Robertson: The Minister seems to have skipped over one of my questions. After 2003, it is likely that no regulator will remain other than Ofcom. To whom would he envisage transferring assets and responsibility under those circumstances?

Kim Howells: The hon. Gentleman is right to ask that question. The regulators would remain because no transfer of power would have taken place. The present five regulators, including the Department of Trade and Industry, will remain, and no powers will be transferred because Ofcom will exist only as a body, not a regulator.

Anne McIntosh: I am missing something. I am grateful to my hon. Friends for pointing out that the Bill does not permit the transfer. The Minister says that the transfer will be provided for in the main communications Bill. Without being asked, we are told that we are going to authorise the Secretary of State to make the transfer.

Kim Howells: I am sure that the hon. Lady understands that that is not true. The Secretary of State will have the power to wind up Ofcom should it not be needed; for example, if the main communications Bill fails. That is what the hon.
 Lady pressed for in earlier amendments. The Bill will allow the Secretary to State to ensure that Ofcom does not remain in perpetuity.

Laurence Robertson: The Minister is trying to be helpful. Is he saying that the Secretary of State will not have the power to wind up Ofcom after existing regulators have been abolished?

Kim Howells: I am saying exactly that. It will not be possible to wind up Ofcom after it takes over the regulatory functions from the existing regulators. The powers in clause 5 are confined to cases in which proposals have been abandoned or modified in a way that meant that Ofcom were no longer necessary. The provisions of clause 5 are a sensible precaution against substantial changes in the circumstances of communications regulation.

Michael Fabricant: Who will have to repay the operating costs?

Kim Howells: The hon. Gentleman knows that the regulators are in the public sector. They are paid for by Government, except where they levy fees from those they regulate. Initially, the Secretary of State will provide loans to set up Ofcom. She must ensure that assets and any moneys paid are repaid to the Department. This is not a commercial deal and does not involve an outside bank or body. The Secretary of State will have to make the decision because Government resources are involved and, ultimately, the DTI and DCMS will have to decide on how best to use those resources.

Anne McIntosh: I notice that, quite late on, an amendment has been tabled to delete clause 7(5). Can the Minister explain the relationship of that amendment to our discussion? I am worried that the Government will run into difficulties.

Kim Howells: That is not what this debate is about. It is as unlikely as could be that the provisions will be ever needed, but they provide a necessary safeguard and should form part of the Bill for all the reasons expressed by Opposition Members.

Anne McIntosh: I shall not go over the ground already covered, but the Minister and the Committee feel our anxiety.

Michael Fabricant: The Minister was helpful in his response to my intervention, but he did not explain how the shortfall will be met if disposal of the assets does not cover the cost of the loan.

Anne McIntosh: I have as much difficulty with that point as my hon. Friend and I regret that the Committee is still in the dark.

Kim Howells: The assets will not be disposed of. They are paid for by taxpayers. The Secretary of State, ultimately, is responsible for disbursal of the funds and loans. He or she will decide at the time how best those moneys and resources should be used. I hope that the hon. Lady understands my answer.

Anne McIntosh: That is clearer than the Minister's previous answer. I think that my hon. Friend the
 Member for Lichfield was trying to say that the money should revert to the industry whence it came.

Michael Fabricant: No, because at the stage of the shell organisation the regulatory bodies will still exist. Taxpayers will have given money to the shell organisation for buildings and so on, but there will be operating costs also. If the shell organisation were dissolved—we accept that that is unlikely—and the assets and buildings were disposed of, but the total cost of the assets and operating costs was greater than what can be recovered from liquidating the shell organisation, there would be a shortfall. Will taxpayers ultimately pick up the bill, or will the cost be forwarded to the regulators, and thence to the people they regulate? That has not been made clear.

Anne McIntosh: My hon. Friend makes a pertinent point and I am sorry that I was so slow to get there.

Kim Howells: May I confirm for the third time that taxpayers will pick up the costs?

Anne McIntosh: Right. This is a matter to which we want to return and I give notice of that. I hoped that the Minister could give us a timetable for the transfer of the assets.

Kim Howells: The hon. Lady has tried that before.

Anne McIntosh: Yes, and I shall do so again. I shall not give up so easily. I want to know what the timetable will be for the transition phase and the final phase, but it is appropriate to return to that at a later stage.
 Question put and agreed to. 
 Clause 5 ordered to stand part of the Bill

Michael Fabricant: On a point of order, Mr. Gale. You are an experienced Chairman and I would like some clarification. When a husband and wife are not speaking, they may ask questions of each other through an intermediary. Is it normal in Committee for an hon. Member such as myself to have to ask the Minister questions through my hon. Friend, who then has the Minister intervening to answer them?

Roger Gale: I am not entirely sure that that is a genuine point of order. It is up to the Member who has the Floor to decide whether to give way to a Member who is seeking to intervene, and it is up to the Member who is intervening to make his point briefly. It is not up to the Chair at all.Clause 6 Interpretation

Clause 6 - Interpretation

Question proposed, That the clause stand part of the Bill.

Anne McIntosh: I do not intend to detain the Committee for long, although there is one item that I shall wish to return to at the earliest opportunity.
 In responding to the previous clause stand part debate, the Minister said that the DTI currently acted as a regulator, so it is curious that it is not mentioned in the Bill. We all know what the DTI is, but it would have been appropriate to define its role for the benefit of laypersons like myself who do not have the great wealth of expertise of my hon. Friends and other 
 Members on both sides of the Committee. Will the Minister take this opportunity to rectify that? 
 I shall return to the other matter in the not too distant future.

Michael Fabricant: Clearly, the clause must be included in the Bill, but it is a sad clause, owing partly to its omissions and partly to its inclusions. As my hon. Friend said, it would have been clearer to include some definition of the functions of the DCMS and the DTI in relation to Ofcom, although it might not have been within the scope of the Bill to do so. The situation was even more disparate before 1997, when the Home Office was also involved. That is yet another argument for there being only one Government Department with responsibility for communications; a Government communications organisation.
 It is a sad clause because there is no subsection 1(e) referring to the BBC. There should be, because the BBC board of governors is a regulator.

Roger Gale: Order. The BBC is not part of the Bill and we have had this debate about four times already.

Michael Fabricant: Another sad part of the clause is subsection (2)(b)(iii), which cites the Marine, &c., Broadcasting (Offences) Act 1967. That is sad for me because it made a dishonest man of me.

Angela Watkinson: I rise briefly for a point of clarification. The list of existing regulators in clause 6(1) does not include the Radiocommunications Agency. My Library research paper says that there are five regulators, of which the Radiocommunications Agency is the fifth. Will the Minister elucidate?

Kim Howells: I am advised that although the clause does not cover the Radiocommunications Agency, which is currently a manifestation of the Secretary of State, the agency is expected to co-operate with Ofcom in a similar way to that set out in the clause. I hope that the hon. Lady accepts that answer.

Angela Watkinson: I am grateful to the Minister for his explanation.
 Question put and agreed to. 
 Clause 6 ordered to stand part of the Bill.

Clause 7 - Short title, commencement and extent

Kim Howells: I beg to move amendment No. 33, in page 6, line 14, leave out subsection (5).
 It is unusual for me to move an amendment. Clause 7(5) was inserted in another place to avoid infringing the privileges of this House. As is usual in these circumstances, amendment No. 33 removes it.

Anne McIntosh: This is one of many amendments that were tabled in the other place. I want to press the Minister on several points arising from what he has just said and from what he said during the passage of the Bill. We are told in the explanatory notes on clause 7:
This order-making power will be used so that OFCOM can be operational by the time that the Communications Bill is brought into force.
 We are also told about the financial effects of the Bill: 
The Government envisages that the initial planning costs of establishing OFCOM so that it can prepare to receive its functions will be in the order of £5 million spread over the period of transition.
 The notes continue: 
By adding to the existing regulators' statutory functions—

Roger Gale: Order. Before we proceed down that road, the amendment, not unusually in procedural terms, is very clearly and narrowly defined. As with my standard practice as Chairman, I am perfectly happy to allow a stand part debate now to broaden the issue slightly, on the clear understanding that we have only one stand part debate and that this is it. The hon. Lady may, alternatively, wish to draw her remarks to a conclusion, allow the amendment to proceed and then have a stand part debate. I am very relaxed about which way she plays it, but she cannot have it both ways.

Anne McIntosh: I am happy to accept your invitation to have only one debate, Mr. Gale, and have a clause stand part debate now. I wish to refer only to this paragraph.
 The explanatory notes state: 
By adding to the existing regulators' statutory functions, the Bill will allow existing regulators to recover a proportion of the establishment cost from the communications sector. These powers will mean that the net cost to public expenditure—
 I presume that that means the taxpayer— 
will be significantly less than the overall gross cost of the practical transition.
 I wish to allude to the remarks that the Minister made when concluding the last debate. Being a lawyer, financial matters do not come easily to me. He clearly stated, as I think the Committee was happy to accept, that there will be a cost to the taxpayer.

Roger Gale: Order. I am trying to be as helpful as possible, but even under the terms of the short title clause, which is clause 7, those matters are not covered. Even in a very broad stand part debate, I am afraid that the hon. Lady is out of order.

Anne McIntosh: I crave your indulgence, Mr. Gale. I am talking about amendment No. 33. Am I right in thinking that the Minister just moved that, or are things going so quickly that I cannot keep up? That is always possible. I am responding to amendment No. 33.

Roger Gale: I must advise the hon. Lady that the House of Lords has inserted a privilege disclaimer in the last subsection of clause 7. The scope of the debate on the amendment to remove it is confined to the question of whether the House of Commons should maintain its claim of financial privilege. That is all that is under discussion, and that is not what the hon. Lady is discussing.

Anne McIntosh: The Opposition wish to retain that very welcome subsection. Clause 7(5) is very clear and states:
Nothing in this Act shall impose any charge on the people or on public funds.

Richard Allan: Perhaps I can assist the hon. Lady. Subsection (5) is, in a sense, fictional; a fiction by convention. Having seen such
 things before, I can assure her that there is really no need to go over it. The fiction is inserted so that the Lords can debate the Bill. It will obviously cost the public money. I do not think that any of us are under the illusion that it will not cost the public money at some point.

Anne McIntosh: I am sorry, but I think that we must have this commitment on the record. We wish to retain it, whether it is a fiction or a privilege. We can bandy the words about and discuss fiction and privilege and convention. The whole of the British constitution is a convention at the moment. This House operates by convention. We are all familiar with that concept. Having obtained clause 7(5) as an amendment to the Bill, I think it important that we retain it here. I would resist any attempt by the Government to remove it.
 I am referring to the financial effects of the Bill as explained to me in what are meant to be simple, layman's terms in the explanatory notes, which say: 
These powers will mean that the net cost to public expenditure will be significantly less than the overall gross cost of the practical transition.
 We are still trying to establish what the transitional costs will be. I am simply trying to retain clause 7.

Simon Thomas: As I understand it, the hon. Lady is arguing against removing the subsection; I will accept that that may be fiction for the moment. Can she explain how that stands beside her previous amendments, which sought for Ofcom to be economically efficient? This clause would refuse to allow any variance in the public charge. Surely one must set a sprat to catch a mackerel, so how will Ofcom achieve what she wants if its hands are so tied?

Anne McIntosh: As my hon. Friend the Member for Lichfield put on record, there is the question of loans, their repayment and what their net effect will be. There is no point beating around the bush, or having the same debate over again. The hon. Member for Ceredigion (Mr. Thomas) is absolutely right that I have forcibly argued throughout our discussions that we should know precisely what cost savings the Government seek to make. That request has fallen on deaf ears. We still do not know what the transitional arrangements will be and, should the Bill's provisions fail by 2003—or very shortly thereafter—we do not know what assets will have been transferred, and what assets will be transferred back to the Secretary of State. I would resist amendment No. 33 and argue in favour of keeping clause 7(5).
Michael Fabricant rose—
 Amendment agreed to.

Michael Fabricant: On a point of order, Mr. Gale. I am curious as to why I was not called.

Roger Gale: Quite simply, because the debate is becoming circular, although it is narrow. The hon. Member for Vale of York has wound up from the Opposition Front Bench and the Chairman has taken a view.
 Question proposed, That clause 7, as amended, stand part of the Bill.

Michael Fabricant: I agree that clause 7 should stand part of the Bill, but it does not cover what happens now that amendment No. 33 has been passed. The clause does not deal with the question of what happens to the public purse if the assets—

Roger Gale: Order. The hon. Gentleman is out of order. The clause debates the short title, the commencement and the extent of the Bill. The hon. Gentleman is not speaking to the content of the clause, and is now trying to speak to the content of a subsection that has just been deleted. He either remains in order or returns to his seat.

Michael Fabricant: I return to my seat.
 Question put, That the clause, as amended, stand part of the Bill:—
The Committee divided: Ayes 12, Noes 4.

Question accordingly agreed to. 
 Clause 7, as amended, ordered to stand part of the Bill.

New Clause 1 - Digital television

'It shall be a duty of OFCOM to make proposals to the Secretary of State on the regulatory requirements relating to analogue switch off and full conversion to digital television within one year of OFCOM's establishment.'.—[Miss McIntosh.]
 Brought up, and read the First time.

Anne McIntosh: I beg to move, That the clause be read a Second time.
 I am grateful for this opportunity to move new clause 1, Mr. Gale. Several new clauses were tabled that have not been called for debate, and I hope that we shall have an opportunity to discuss them on a future occasion. 
 New clause 1 speaks for itself. Paragraph 72 of the report on the White Paper ''A New Future for Communications'' by the Select Committee on Culture, Media and Sport urges the Government to consider that 
Access to the Internet can be an important driver of the take-up of digital television, and the expansion of digital television services can be fundamental to achievement of the Government's objective of universal Internet access by 2005.
 This debate gives us an opportunity to ask the Minister to confirm whether that is still the Government's objective. The Select Committee went on to say that it is also 
concerned that these links are not readily apparent in the two separate Government policies at present.
 It recommends that 
the promotion of Internet access through digital television become a more prominent element in Government policy for the Internet and that the promotion of digital television by the Government and the industry lay greater stress than is currently evident on digital television as an easy and affordable gateway to the Internet.
 The Government's reply to that was very positive, saying that 
the digital television action plan should ensure that the synergies between Internet access, digital television and the delivery of Government services electronically are developed. Linked with a telephone line, the television (analogue or digital) can provide an easy means of gaining access to the Internet for those without a personal computer (PC). Much of the material available on the Internet, however, is designed for access through a PC, and we must be careful to see that consumers are not deterred from using the Internet by a poor early experience through the television.
 The BBC told us that the take-up of digital television has been rapid. In three years, more than 9 million homes—more than a third of the country—have gone digital. The BBC reckons that nearly half of the nation's children, 46 per cent., live in a house with digital television. The vast majority of homes with digital television have chosen one of the three pay-television options, and the BBC goes on to elaborate those. The downside is that two thirds of the population remain on analogue, and most have only five channels. Among that group the story is one of overriding confusion about digital, and I would probably count myself as such a person. 
 Many people are unsure what digital offers or how they could go about getting it if they wanted it. The range of providers, packages and platforms is daunting. Broadly, the older people are, the less they know about digital and the less they think they want it. Just more than one third of people think that they are likely to go digital in the next five years; just under a half think that they may go digital; 21 per cent. think that they will stay analogue. A point that was made forcibly during the Christmas shopping period and the January sales was that nine out of 10 sets sold in 2001 were analogue. The Government seem to want to switch to digital, but we do not see the action to make that a reality.

Richard Allan: Does the hon. Lady accept that, from a technical point of view, the best option is to buy traditional television sets and then to obtain digital television access by having a separate set-top box or other device? The sale of analogue televisions is not a measure of the failure to roll out DTV.

Anne McIntosh: The hon. Gentleman will be aware from local BBC that Pace in west Yorkshire has launched a box that will be on sale for £99. [Hon. Members: ''It is already on sale.''] I accept that. The problem is that a separate box is required for each analogue set in a home. Hon. Members who have, as I do, a London flat and a constituency home would need two boxes.

Derek Wyatt: In fact, you need only one box to link your other televisions sets at home. You can watch different programmes throughout the house.

Roger Gale: Order. I cannot, because I do not have digital television in east Kent. The hon. Gentleman was addressing the Chair.

Anne McIntosh: The hon. Gentleman's information is most welcome because the briefing that I received from the company that makes the set-top box suggested that one box would be needed for each television.

Brian White: NEC helped to develop the box with Pace and carried out the research in my constituency. My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) is correct. Internet access is an active occupation and watching television is a passive occupation. How does the hon. Lady reconcile those?

Anne McIntosh: I always feel that I should be involved when watching television, but perhaps that is at the end of a working day. The hon. Gentleman's intervention was helpful. The Government have made several policy statements to the effect that universal access to the internet will enable more and more people to have access to the technology that they hope will be available throughout the country. On page 32 of the White Paper, the Government envisaged people such as me, who are not as computer-literate as we would like to be. Paragraph 3.10, which is headed ''Supporting individuals in using the new communications technologies'', states that the Government
will ensure that relevant education and training programmes allow everyone to maximise the opportunities afforded by these new communications technologies—both to improve the quality of their lives and to enhance their work prospects.

Angela Watkinson: Does my hon. Friend want to include in the proposals support, help and protection for the many elderly people who may not want to buy a modern television? My mother-in-law was reluctant even to change channels with the remote control and had no interest in developing technology. We do not want to cut off viewers who want to retain their analogue sets. I am sure that my hon. Friend would want to incorporate that in the proposals.

Anne McIntosh: Not only would I wish to incorporate that generation, I would like someone to tell me after the Committee how to set my video recorder when I am not in the room. Many of us will wait until our analogue sets break and we have no alternative but to change to digital television. As a Scot by birth, I can say that the price will have to fall substantially before I am moved to accept it.
 The new clause is a challenge to the Government and would make it 
a duty of OFCOM to make proposals to the Secretary of State on the regulatory requirements relating to analogue switch off and full conversion to digital television within one year of OFCOM's establishment.
 The Opposition would like a target date of 2006. There is a discrepancy between that and this proposal. However, I hope that the Minister is minded to support the new clause.

Ian Taylor: The new clause is important and reasonable. I am sure that the Minister will be tempted to accept it, regardless of what he may have been advised.
 The frustration caused by the digital versus analogue debate is considerable. At my instigation, the Broadcasting Act 1996 set up a timetable for guidance. Officials do not sit in Committee, but if they did, they might nod their heads, and I would have noticed them doing so at that point. I was concerned that if the timetable were not included, the concept of analogue switch-off would not be grasped. We set a five-year target of 50 per cent. That was not terribly realistic, but I wanted people to understand that the process would take place. I chide the Government for not having grasped the issue early enough, but I credit them for doing so in the last month or two. 
 The appointment of Barry Cox from Channel 4 to galvanise interest is a great step forward. ONdigital, now ITV Digital, raised the question of whether new sets were marked as digital. Many people purchased widescreen television sets assuming that they were digital. They then had to either adapt their existing set-top boxes or obtain separate boxes, which meant competitive giveaways for a while. 
 All of those factors complicate a worthwhile Government objective; the transfer from analogue to digital. That ranges more widely than television. As the hon. Member for Milton Keynes, North-East (Brian White) said, the objective effectively brings the internet into every house in the country. I think that there are about 45 million televisions in the country and the penetration rate is significantly higher than 90 per cent. I will defer to the Minister if he has up-to-date figures. There are 21 million households in this country, so the average would be two sets per house. Digital television would contribute far better than any computer in terms of the Government's target of ensuring that everyone is online. Television, cable and satellite companies are aware of that tremendous opportunity. The Government have a real interest in clarifying a date for analogue switch-off. 
 The spectrum that surrounds the transmitters is valuable. The analogue signal has to be kicked on each time it hits a transmitter, which causes distortion of the spectrum. Valuable radio spectrum can now be auctioned off. I hate to use the word ''auctioned'' because Ministers' eyes click up pound signs. That spectrum can be used for alternative purposes, which I do not have time to describe. Depending on the latest estimates of the worth of that spectrum, there could be a way of facilitating the buy-out of the residual owners of analogue sets, or some form of cross-subsidy, to enable the Minister to get at the people who might not wish to switch. Unless we make them switch, we will be unable to shut off the analogue transmitters across the country.

Richard Allan: The hon. Gentleman raises an interesting point about the value of the spectrum. I tabled a parliamentary question some time ago to ascertain that value, because I thought that any money coming in could be spent on assisting the transfer. The response came back that no calculation had yet been made in any Government Department of the potential value of that spectrum. The digital strategy is entirely altruistic, and the Government have no pounds signs
 in their eyes; at least when they are giving parliamentary answers.

Ian Taylor: It is always intriguing that when Governments change, files do not pass across. If we return to the files that existed before May 1997, some figures emerge. Even in those days, I took an interest in what it would take to facilitate the last analogue television sets being switched off. Analogue cannot be switched off if a significant number of people in the country are still clinging to it.

Brian White: Is not one of the problems in this debate that we are concentrating on televisions rather than the access methodology? It is the access methodology, whatever it is, that is important, not the number of television sets, which are simply boxes to receive the signal at the end of the process.

Ian Taylor: Normally, I agree with the hon. and learned Gentleman—learned in the sense of the industry, rather than of law—but I am not sure that I do in this context because of the psychological importance of the television set. Of course, broadcast in whatever form it takes in a digital age can come to any receiver. As the hon. Gentleman rightly said, that does not have to be the television set. There are active and passive aspects to this. Nevertheless, the television set is an important form and it would be an irresponsible Government who tried to switch off the television sets of people who regarded them as the main way in which they received broadcast information.
 I understand the hon. Gentleman's technological point, but there is a psychological issue involved. There is also an economic issue, partly because one cannot release the analogue spectrum until one has switched off all the transmitters. We must also ask how to buy out the last percentages. I hope that now Barry Cox is there, the Government will have a massive campaign to persuade people to switch and that they will encourage set manufacturers increasingly to produce digital televisions and kitemark them. 
 If my memory serves me well, this country is a significant manufacturer of television sets. It would boost us in our world leadership of television manufacturing if we could generate more purchases of digital televisions. The old days in which television were hardly ever changed are beginning to alter. There is an opportunity to renew through obsolescence rather than for other reasons. If people want to change their set, we should make sure that they buy a digital one. 
 In any event, there will have to be some campaign to get through the critical mass. Ways must then be found to complete the removal of analogue sets, and they may well require Government funding. Patricia Hodgson, who is now at the Independent Television Commission, has been thinking innovatively—I am not saying that her proposals have my entire support—about how to arrive at an analogue switch-off, and I urge the Minister to take that very seriously. 
 Returning to the contents of the new clause, the timetable proposed seems to be de minimis. We should not leave things too long and at least this would place a burden on Ofcom to get its act together quickly. In 
 doing so—and taking into account the point made by the hon. Member for Milton Keynes, North-East that we are talking about not only the television set but a whole range of broadcasting platforms—we could find a way of reaching the objective of analogue switch-off, and of putting Britain ahead of other countries in that process.

Michael Fabricant: In some ways, we are ahead of other countries. There is already 33 per cent. penetration of digital television reception among households in the United Kingdom. To answer my hon. Friend the Member for Esher and Walton (Mr. Taylor), television penetration stands at about 98 per cent. of households. We have to applaud the BBC and the independent television companies, and latterly Castle Communications and NTL, for achieving that in a country that is not as topologically suitable for terrestrial television as, say, Holland, owing to its lumps and bumps.
 The whole raison d'etre of the Bill is the acknowledgement that there is convergence between various technologies. The hon. Member for Milton Keynes, North-East rightly pointed out that this is not only about television, but about the internet and a two-way flow of digital data. However, in relation to new clause 1, it is right to talk primarily about television because that is what is involved in the analogue switch-off. If the new clause said that there should be a deadline of one or two years for analogue switch-off, I would have difficulty in supporting it, but it does not. It simply asks for Ofcom to address itself to the problem and to make proposals. 
 Why is there urgency in doing so? As you will know, Mr. Gale, from your past experience before coming to this place, for a long time there has been a limit to the amount of spectrum that is available to radio and television broadcasters. We cannot enjoy the situation that exists in the United States, where there is five times the population and about 50 times the land mass. You said, Mr. Gale, that digital television is not available in your part of Kent—nor is it available in Sussex and elsewhere—because of the co-channel interference that it might cause with France, Belgium and Holland. That is a real problem, given the amount of frequency that is available. Yet in this country we have, and are pleased to have, many programme production houses, and there is not sufficient channel space to enable all their programming to be made available unless we go digital. 
 We should continue to stimulate the digital economy to force Ofcom to come up with proposals. It is all very well for the Government to say that they would like to see analogue switch-off, but it needs to be dealt with. I wish that I could cast my mind back to the days when we switched off 405 lines—VHF transmission—and went on to 625 lines. I do not know how many television sets were still receiving black and white television on VHF, but I think that it was quite a large proportion. 
 I understand that members of the Committee may be worried that analogue switch-off will deprive people of being able to watch television. There has already been talk about auctioning off frequencies that would be made available by the switchover. Will the Minister 
 consider earmarking a small part of the money from that to provide digital set-top boxes to enable everyone to watch digital television? 
 I disagree with my hon. Friends the Members for Vale of York and for Esher and Walton in that I do not believe that the way forward is to stimulate manufacturers to produce digital televisions. As the hon. Member for Sheffield, Hallam (Mr. Allan) said, there are many ways of delivering digital television—as well as various platforms—such as different sample rates and so on. Technology changes. As a consequence, set-top boxes can and will change in future. 
 There is flexibility in having an analogue set that can be attached to different types of set-top box. If one buys a digital television, one might be quickly lumbered with old technology; different ways of delivering digital encryption to enable the picture to be shown will create real problems if decryption, or decoding, from digital to analogue is built into the television. It is not as easy as merely switching over to a set-top box. 
 I plead with the Minister not to get too many pound, dollar or, God forbid, euro signs in his eyes with regard to the auction. It was interesting this morning when Sir Christopher Bland, the new chairman of BT, was giving evidence to the Select Committee on Culture, Media and Sport. I asked him about the burden of debt that BT has and he was able to reassure us that it has reduced somewhat. I also asked him whether he thought it had been an effective sell-off and he said, ''Well, it was a good auction for the Treasury, but in the long term not necessarily a good auction for Great Britain Ltd., because in some ways it will restrict the actions of BT and others who have paid such an inflated rate.''

Ian Taylor: That is an intriguing point. As the auction was thought up by the previous Conservative Government, I find it difficult to criticise it. However, I must say that it was not the Government who upped the bidding, or who delayed the process until we hit the boom in the stock market. The then British company One–2-One delayed the whole exercise through legal processes until the bidding became frenzied. My criticism is not of the amount of money that was raised from consenting adults in companies, but of the fact that the Government did not use some of that money to reinvest in the process of analogue switch-off.

Michael Fabricant: I welcome that intervention, and I suspect that I shall have an interesting discussion on that subject with my hon. Friend outside this Committee Room. Of course, they were consenting adults working for consenting companies, but the bottom line is that the Treasury was effective in ensuring that it gained the maximum amount of money from the auction. Whether that will benefit the industry in the long term is a moot point.
 There is a sad and major omission from the Bill of any discussion about analogue switch-off. I cannot recall the complexion of the Government who took the bull by the horns and made the brave decision that 
 there would have to be a switch-off from VHF television—bands 1 and 3—to enable UHF television, which has 625 lines, to go ahead. Perhaps it was a Labour Government. This Government must also make a decision sooner or later. If they leave it too long, a Conservative Government will make it in three, four or five years; possibly sooner, depending on industrial action. 
 The Government are going to have to address the question of analogue switch-off, which is a major omission that has not yet been addressed. I am now tired; I have spoken at length and shall now be seated.

Kim Howells: As the hon. Member for Esher and Walton informed us, the amendment would place a similar requirement on Ofcom to one that is in force under section 33 of the Broadcasting Act 1996, upon which his distinguished fingerprints are clear. Section 33 requires the Secretary of State to keep under review the development of digital terrestrial television, the availability of existing analogue services in digital form and the possession of digital receiving equipment in order to decide when analogue services should be switched off. For that purpose, the 1996 Act requires the Secretary of State to ask the ITC and the BBC for a report on or before the fourth anniversary of the day on which the first television multiplex was granted.
 The hon. Member for Esher and Walton will be pleased to learn that I made a formal request to the ITC and to the BBC in December 2001 jointly to undertake a review into the progress towards switchover, and that report must be submitted to me within 12 months. We have heard some fascinating contributions on this important issue. During the course of the substantive communications Bill, we shall hear many more informed contributions, but in the context of the Bill, the Government oppose the new clause.

Anne McIntosh: I am most grateful for the positive contributions from all those who have participated in the debate, and I am especially grateful for the contributions from my hon. Friends.
 I welcome the comments by the hon. Members for Sittingbourne and Sheppey and for Milton Keynes, North-East. As my hon. Friend the Member for Lichfield said, we are considering various types of communication such as television, internet and mobile phones. As the useful document circulated by the Parliamentary Office of Science and Technology states, using television as a monitor for viewing internet content is something that all of us would support and approve. It can only help the Government to achieve greater take-up of digital television if we can encourage digital television operators to provide full internet access through set-top boxes using the phone line to send and receive data. That is something of which we are mindful. 
 We can argue, although this is not the context in which to do so, what the take-up by consumers should be. My hon. Friend the Member for Esher and Walton did that when he was the Minister responsible for the Broadcasting Act 1996. It is important to place on the record that we want the Government to ensure that Ofcom has a duty to make these proposals, and we would want to proceed with the vote. 
 Question put, That the clause be read a Second time:—
The Committee divided: Ayes 5, Noes 8.

Question accordingly negatived. 
 Bill, as amended, to be reported.

Roger Gale: On behalf of the Committee, I thank the Officers of the House, the police, the Hansard staff and all concerned who have facilitated the Committee's discussions.
 Committee rose at five minutes to Six o'clock.